tv First Up With Angie Lau Bloomberg October 7, 2015 7:00pm-8:01pm EDT
♪ >> surprise loss. deutsche bank slums after hours after worse than expected results. hillary rejects the transpacific trade agreement, saying it will not create jobs for america. hold that thought. says the fed should delay a rate rise. ."lcome to "first up i am angie lau. let's check in on markets in asia right now.
australia, gains of 31%. ,ustralian dollar spot unchanged at 2%. zealand, speculation things will be kept at that prices rose.airy of zealand equity markets, -- up .3%. 225 closed like this yesterday. .75% higher. futures in chicago pointing to a higher open after a rally on wall street. at 119.99. deutsche bank is in focus,
plunging in extended trading after worse expected result, a $7 billion loss last quarter. they cut or cancel dividends. is tracking the story for us in new york. what is driving the loss? this is the proverbial "kitchen sink" quarter. they are writing down the value of their investment bank they are trying to sell. they are taking a right down -- on a state in a chinese bank and adding one billion euros to their litigation reserve. angie: how unprecedented is this? >> the biggest loss in multiple decades. they are potentially cutting or eliminating the annual dividend. if they did not pay a dividend, it would be the first time on
record since basically world war ii. this is a fairly significant event. what happened when tujane took over. angie: why is this happening now? >> john cryan is announcing a new strategy this month. he wants the strategy to go forward. this is his way of really getting rid of some of the old tryings, dropping those, to start moving forward. the bank will have a fairly decent capital ratio. indicated he does not want to be raising more capital. that is why you're seeing the effort on the dividend. angie: michael moore, thank you
so much. out of new york this morning. other headlines right now, lance created the world's largest brewing operation has hit a snag. sabmiller has rejected anheuser-busch's latest offer. the company chairman is said to be leading the fight against the $100 million takeover. he also chairs rio tinto and was responsible for rejecting the merger with glencore. president obama's landmark trade deal has taken a hit from a potential successor. hillary clinton opposes the tpp, saying the pact does not meet her standards. the president has launched a campaign to have the deal ratified, but clinton says it will not create jobs or raise wages in america. >> what i know about it, i am
not in favor of what i have learned. there is another element that is important. trade agreements do not happen in a vacuum. in order for us to have a competitive economy, there are things to do at home that raise wages. confirmedkswagen has its new chairman as it faces question at home and abroad about emissions cheating. he will tell the german government what is manipulated and what it intends to do. the amount of money vw made will be a factor in penalties imposed. it could be as much as 18 billion dollars. and e the acquisition ofsanda ie an extra $1quar
billion in assets. biotechcks rebounded as and energy shares gained, sending the s&p 500 to the highest level since august. su keenan is tracking the action on wall street. >> highest levels since the end of august. we did see gold and treasuries lower. dollar weakness has a lot to do it this. emerging markets were and eig ht-week high. there was also a gain in commodities but. new york oil was in the spotlight. mark,ged above the $49 highest since july. after thatack increase. a lot of people want to see if
oil can hold at $50, but citigroup is not sure if it is a good time for the rest of us. >> it is a repeat of last spring. money chasing headlines. state lastarish week, then a report that was fairly bullish. we should have learned from last spring it does not happen. goldman, morgan stanley, and citigroup are warning that prices may stay lower for years. earnings season is upon us. yum! brands down 19%. raw materials stocks did well. billionaire activist carl icon got his way and putting favorite on the board. mining was also one of the big winners, up 3%. angie: the imf made interesting
comments on the fed. >> no shame in their game. there was a lot of criticism on the fed's holding off on pulling the trigger. imf is giving them renewed credit for the weaker dollar. the director of the monetary department told bloomberg that waiting as the fed is doing is less risky than a premature liftoff. he thinks they should do what they are doing. back to you. angie: su keenan, tracking all of that for us. it has been a week of relative calm in the markets here in asia. i say "relative." markets have risen for six consecutive sessions. that has coincided with a weeklong holiday in china.
will that change when chinese markets come back online? juliette saly with what we can expect. juliette: the longest winning streak in asian markets is april 28. coincidence? rising to a etf's high and seven-week f in theest listed et u.s. tracking at the highest level since august 21. week, andver the last traders have really started to s on whether we have seen the worst in china. , whichg seng index shares, h shares
up 7%. we may see a little bit of a rally when they come back online. angie: analysts appear mixed as to whether the volatility is over. what should investors be doing? selling into the highs? juliette: this is where we are seeing analysts mixed. there is we should be using this rally to sell. bocom is bearish on a shares saying the shanghai composite is above its average. he is also saying that government efforts to bolster are draining liquidity with plummeting volumes, that suggests investors are bullish. he said there will not be cheap valuation until the composite is
a 2500 points. t capital says the risks are priced in. we have support from the vet. they are not hiking rates this year. to cut down on first-time buyer deposits. res have been sha the best global gainer. when it comes back online, will investors buy or sell? angie: thank you so much for that, juliette. of those stories on bloomberg business, bringing together digital content in one address. four ways theom,
nato, the defense department, and a u.s.-afghan group. russia has added a new dimension to its military campaign in syria. warships in the caspian sea fired missiles at 11 targets, destroying them all according to the defense minister. moscow says they destroyed munitions factories, command posts and "training camps." five people, including children, were killed by russian bombs. reign could be over. committee has requested he be suspended 90 days for corruption allegations. the investigations will continue before a final decision is made. let's get back to the markets.
we saw chrysler rising again despite plans for a strike. shares climbed for a sixth straight session, up 4%. alife saw a decline after a cut its sales forecast, down 7.3%. tumbling to his lowest after its ipo after morgan the targetshed price, citing disappointing sales. as for the broader markets, the s&p 500 rose to its highest level since august, led by a rebound in biotech shares. let's get more with the president of kumar global strategies.
always good to talk to you. the last time we talked, it was pretty much the same thing, right? china.ed about the fed, but what is different? >> what has changed recently is that we talked about whether the economy was weak or strong. analysts think about the economy as being strong, but there are signs of weakness. the jobs figure, you found people looking for 250,000 jobs being created in the united states. we had 542,000. not only that, but the numbers were uniformly poor, including a 38-yearparticipation to lows. there are greater signs of economic weakness. the china impact is being felt in german factory orders and
industry production in the last two days. we are seeing that coming to the u.s. in a much bigger way than we have seen. that is what is different in the last several days. angie: let's break down the job figures a little bit behind the headlines. what is concerning for anyone is that unemployment rate, 5.1%. reason whye, but the it is at 5.1% is the concern here. lee has more people drop out of the labor force. disappointed by labor conditions and the ability to find quality jobs. going forward, what will consumer sentiment feel like? >> first of all, to look at the number of people who dropped out, 350,000 people drop out of the workforce in the last month,
that was the major reason why the unemployment rate was at 5.1%. what happens here is that you can lower the unemployment rate in two ways. you can create more jobs and bring more people into the workforce. second, you can throw more people out of the workforce and pretend they do not exist. , that is what we have been doing in the united states. and that is very negative for consumer sentiment. angie: that is it. yours that changing strategy for investors? >> i think the way it is morphing is i have been saying that 10-year treasury woodhead would head to 2%.
for investors, they should be looking at the 10 year treasury going towards 150. global a very weak economy and lack of inflation. the second way to play it on the equities side, going back to the question of few minutes ago, i would say selling to the rally rather than buying on the dip because it will not be long-lasting. in terms of where you want to be, you want to be in the defensive area of the market. equities with high dividends, care, theealth consumer staples rather than discretionary. that is the way to reduce your loss and keep a focus on income. those would be some of my counsel at the moment. angie: wise counsel, indeed.
angie: the rugby world cup rolls on. south africa underlined a return to form, crushing the usa 64 reporter:0. 64-0. nimibia finished within seven points of georgia. tearingrica is back to the eagles apart. they have equal the world cup record of 18 points. the impressive performance shows south africa has put the collapse to japan behind them. the last time three runs were scored in a world cup game was
in 2007, when the team went on to win the tournament. cofounders are well known for their strange relationship. ev williams said the decision to persuade jack dorsey to return as ceo is correct. he spoke to emily chang and brad stone in san francisco. >> we thought long and hard about it. everyone from the beginning new that jack is capable. he has a unique perspective on the company. there is a question of if he could do the twitter job and the square job. we wanted to see what our options were. that is our job as a board, to look far and wide. we thought that combination with doing what he had already
done in the last four months convinced us he was the person for the job. >> how do you feel that he is doing two jobs. elon musk said he does not recommend it. >> jack does not recommend it either. it is not ideal. no one would say it is ideal, that we would want anyone's time split. but it did not change that he thought -- we thought he was the best choice. >> and you guys want to reformulate the twitter board and find a new chair. what are you looking for in a new board and chairman? >> we are at the beginning of figuring that out. i cannot speak to it much. we are fully focused on the ceo. it was not until we decided for sure that jack was ceo that we needed a board. >> a lot of attention has been paid to the ev-jack
relationship. how is it doing? >> really well. better than it has been in years. we have come together through the process. i joke that twitter is like a mutual child. wehave come together and hold its future as our highest priority. eye on the future of twitter. imax china makes its market debut. a look at the history and the prospect when "first up" return ♪ (ee-e-e-oh-mum-oh-weh) (hush my darling...) (don't fear my darling...) (the lion sleeps tonight.) (hush my darling...) man snoring
angie: it is 7:30 in hong kong. we are 30 minutes from the open of trading in japan and south korea. you are watching "first up." ♪ top stories, deutsche bank plunging in the extended trading after warning of worse than expected results. in the thirdss quarter after writing down the value of the biggest divisions. they are also lifting litigation reserves and may cut or cancel this year's dividend.
the fed was right to delay a rate hike. the secretary of monetary affairs says the risk of raising rates too soon are greater than waiting too long. l declined to name an ideal time but said a decision should be independent. china volatility may be receiving. g. recedin hong says the shanghai composite must follow another 18% before it is cheap enough to buy. he says government efforts have not been enough to revive a bull market. the ringgit and rupiah have rebounded.
the currencies have been among the worst performers in asia. the slowdown weight on emerging markets. inda amin.o hasl what is behind the turnaround? haslinda: mainly because of disappointing u.s. jobs data. less likelihood for the fed to raise rates before the end of the year. that is positive for emerging markets. malaysia has other reasons. biggest gain in my month because of crude prices rising. it pushed the ringgit up the most in 17 years. for the rupiah, it was because of stock in flow. investors buying back indonesian assets. risk.is positions are being reversed drastically. some have expected a turnaround
in emergency -- emerging currencies sooner than later. angie: it is very notable. what is the sentiment. is the worst over? haslinda: what is worth noting is that with a rebound, the rupiah and ringgit remain the worst performing currencies in asia this year. thendamental concern, commodity outlook weighing on malaysia and indonesia. estimates for the rupiah are 14,700. it expects it to drop to 14,800 by march. current account deficit and stronger dollar driven by prospect of a u.s. rate hike will lead to a weaker currency, including the ringgit and rupiah. the risk is that the rally will
not be sustained. unless there is a sharp turnaround in commodity prices or capital slows, it will continue under pressure. angie: ok. thank you so much for that. let's turn to the bigger picture, imax. you know this company. it popularized the high-quality motion picture experience. it china unit makes its debut in hong kong. david has a preview. david: a sneak peek shows in about two hours in a market near us. not the biggest listing. i think you know what the appeal is, the growth potential. really obvious. clear when is quite it comes to how much the chinese want to watch very clear movies. eight out of 10 highest grossing films in china are in imax
format. , priced at 31 ipo hong kong, below the midpoint. check out commissions and so forth. roughly about $58 million. where will they spend the money? 60% going into expanding the imax theater system and building inventory of equipment. working capital, 10%. building and other investments. this is interesting. i was looking at the terms. this is the prospectus. a film fund, content. it or shouldonvert the actual picture in imax format. angie: the best films are shot in imax format for the audience member, at least. the technology started in
toronto. when you watch the big films, it is skewed a little bit. that is interesting for the growth plan. what else is in the strategy? david: really just increasing the number of imacs-enabled -- imax-enabled theaters. they have 217 in the pipeline. they had signed contracts already. they cannot recognize revenue until they install them in the next six years or so. revenue growth has been explosive. we have data on that as well up until the first half of 2015. half.llion for the first then they install some of the backlog. angie: very quickly, there are risks, right? david: we do not have time to go through each one, but as far as stock rise is concerned, every ipo price after the stock rout
has fallen an average of 21%. angie: thank you for that. time for a look at the top corporate stories on the bloomberg terminal. yvonne: japan could raise $12 billion in its ipo after a tentative price range of $11.67 per share. prices will be listed before japan post lists on november 4. proceeds will be used for reconstruction following the 2011 earthquake. ka-shing has raised a bid for from $11.6ings, up billion. dividends for shareholders have been raised by 50%. this is the latest move to rejig
infrastructure to strengthen a hold on the hong kong utility markets. with ais teaming up ccenture to deliver web content. services that ultimately be bigger than the e-commerce division. those are the top corporate headlines this hour. i am yvonne man. angie: china's chief internet rivals are moving closer together. forces and tencent joint to provide restaurant ratings and bookings all across china. zeb eckert joins us with more. zeb: consolidation, and a lucrative market for both companies. meituan andng about dianping.
two major players in local services market. movie tickets, restaurant bookings. ituant on to the me website. did not make much progress. this is major for people to look restaurants. big services market. $1.6 trillion. ncentave alibaba and te coming together later today for the combination to be announced. it would be the second time that founders ofy ma, those respective companies, come together and resent a challenge to baidu. it would really pose a threat to baidu because they are investing $3 billion in its own product, a local services venture. everything from car service to restaurant bookings -- all those
little elements of life in a big country like china. that adds up to big business with lots of scale opportunities. this for should flag global investors watching around the world and viewers interested in tech stocks. in china talksts about the china slowdown except for local services. that sector has seen really interesting growth. zeb: huge growth. we talk about the big picture, but we tend to forget that people in china have to eat, have their laundry done. all sorts of issues that people overlook. tencent have not overlooked it, and there is plenty of opportunity across all categories of business. even other internet companies looking to get in. angie: thank you so much for that.
high flyers is back this evening here in asia. we are looking at a family's enduring love for jewelry. shop now caters to the middle east and asian elite. we asked them about their favorite memories. diamond is the 218 carat result. -- we sold. it was named the "star of macau." largestlarge list -- flawless diamond in the world. >> wasn't something offered and he got interested? >> we presented it. the diamond spoke to him. carats.18
eni said it would open the door to penetration of the republic. north korea is building up to saturday's 70th anniversary of the workers party. celebrations will be world-class, featuring thousands of ordinary citizens. however, there are reports that kim jong un has ordered the biggest ever show of force, which may include missile launches. begins its annual meeting in peru tomorrow on the back of the cut in the growth forecast. andrtainty over the fed slow growth in china are expected to dominate discussion. the director remains optimistic about china. china is inthink for a financial crisis anytime soon.
certainly not part of our sentiment. but china has borrowed a lot. 25% of the gdp. it needs to engage in the process of leverage at a time when growth is slowing. firms which are in a weaker position because volatility is coming down. entailerage will corporate, exit of some terms. .anagement needs to be prepared >> you are concerned the pboc has not manage the risk correctly? is that the number one scenario? >> we think the authorities are
aware of what is at stake. therefore, they are already on top of the banks, so they can get ready for what is coming. nonperforming loans. banks need to strengthen their buffers against the nonperforming loans. what about the hype coming to soon? did they miss a window? there.window was not i do not agree with a "just do it" strategy for the fed. looking at the united states, in terms of inflation, the conditions are not there for the fed to increase interest rates. our recommendation is to wait until there are plausible signs inflation is really rising. >> could that be in a year?
>> maybe sooner. it is data-dependent. september, i thought it was right. -- joseat was pose a vinals in lima. but sticking closer look at the risk facing the global economy mckay.gh we heard about the holy grail of synchronized global lift off from the imf remaining elusive. basically reaffirming the fed's decision not to lift rates. >> absolutely. has been consistent with its advice to policymakers not to go too early. of the whites of the eyes
recovery, if you will. the board consensus of fed missedthinks the a window, but we can sit back and respect what the imf is telling us. we have had a change of chief economist. first world economic outlook, and he has really put his stamp on the framework. a year ago, the imf was focused on boosting advanced economies. . this year, we have the other side of the coin. about the imf talking risk to commodity exporters from trade drag. that is an important philosophical difference. angie: we saw those concerns in malaysia and indonesia as the rupiah and ringgit cooled off until recently. >> absolutely. i do not buy the recent rally in
emerging market currencies. lurch to the extreme changes in fundamentals. weeks ago,s sure two and there has been a little excess exuberance. malaysia is still extraordinarily exposed to outflow, and indonesia had a three-year drag on trade. it shot itself in the foot with the export of minimal -- mineral oils. angie: can you hold that thought for a moment? breaking news out of japan. latest on the numbers for machine orders. news on machine orders. month on month, we were expecting a recovery. it looks like machine orders are falling 5.7% for the month of
august. economists were expecting a 2.3% rise. this is what we -- worse than what we saw in july. pickre expecting them to up again, but things are still in the red for the third month with consecutive machine orders falling. we saw aunt of in corporate investments recently. that should support an increase in orders, but that is not the case. machine orders year on year, that was also a huge mess, falling 3.5%. the survey was expecting a 3.5% rise. insaw some growth of 2.8% july. trade balance as well. the forecast was expected to widen the trade deficit by three times. slightly better than what was expected.
¥326 billion. one point ¥6 trillion, a little higher than forecast. angie: let's get reaction from hugh mckay. a lot of pressure on japan as well. >> it is not a great time to be a machinery maker in the global economy. excess capacity in china, europe. the japanese are fighting a tough battle to gain market share in a world where there is physical excess stock to be offloaded. business investment is not strong globally right now. non-manufacturers saying they will expand equipment investment. but the global demand for japanese product is soft.
if you get away from a move semiconductors, capital goods are not in a great place. angie: a bright spot? tell me what it is and why. >> one bright spot, the chinese consumer. your remarks earlier in the session about e-commerce, business to consumer, the chinese consumer is doing well. their confidence is building. that is something the world economy can build on. the chinese construction center is weak, but the chinese consumer is tilting in the other direction. businesses need to find a way to leverage that. angie: let's see if that goes through to the markets today after a long holiday. hugh, we will leave it there. help stocksion bid
angie: welcome to the stock exchange. david, what are you watching? mitsui mining reporting a profit ¥8 billion. estimates were ¥10 billion. i am looking at a website operator for elderly care. they are up 72% year to date. zeb: i could not resist. we find a lot of elderly people at mcdonald's. cheap but food is will not be cheaper long in japan. they are ending their weekday lunch discount. go to lunch today. angie: no free lunch, not even
at a discount. that is the verdict from the stock exchange. back in an hour to see how they have done. a lot more in the next hour. stay with us. ♪ ♪ (ee-e-e-oh-mum-oh-weh) (hush my darling...) (don't fear my darling...) (the lion sleeps tonight.) (hush my darling...) man snoring (don't fear my darling...) (the lion sleeps tonight.) woman snoring take the roar out of snore. yet another innovation only at a sleep number store.